MI HB4056

Modifies Section 691 of the Income Tax Act of 1967 to establish rules for applying federal business interest expense limitations (IRC Section 163(j)) to unitary business groups filing combined returns beginning January 1, 2022.

Allows persons in a unitary business group to avoid business interest limitations if they meet any of four conditions: the limitation does not apply to them federally, they are exempt under IRC Section 163(j)(3), they engage in an excepted trade or business, or their affiliated group is not subject to the limitation on a federal consolidated return.

Permits excess business interest from one person in the unitary group to be deducted by other group members with unused business interest limitation; excess remaining becomes business interest carryforward of the originating person.

Requires business interest paid or accrued in the current year to be deducted before carryforwards, which must be used in order beginning with the earliest tax year; when a person departs the group, their carryforward departs with them but cannot be used by departing persons for interest paid to remaining group members.

Applies retroactively to all tax years beginning January 1, 2022 and establishes definitions for business interest, business interest carryforward, excess business interest, and related terms under IRC Section 163(j).